Wednesday, November 14, 2012

Moneyball and the Marlins

The game of baseball itself is incorruptible. It is a beautiful tapestry that for many truly enlivens life. If you saw any of the A's walkoff victories in 2012 you understand this. I will always hold dear the 14-inning walkoff against the Rays on September 13.

The problem is that the same business principals of profit and loss and the never ceasing quest for more apply to those that control the franchises. Exhibit A: Marlins owner Jeffrey Loria. After soaking the taxpayer for a heavily subsidized new ballpark built on the promise of championship caliber baseball, he gave it three measly months and then started unloading stars and contracts. (You can now understand why Albert Pujols wouldn't commit unless the team offered him a no-trade clause.) Then came last night's nearly completed trade of Mark Buehrle, Josh Johnson and Jose Reyes to the Blue Jays for a bucket of prospects and Yuniel Escobar (he of the recent suspension for writing a gay slur on his eye black). Call it Orange Tuesday, or the day that the Loria Reality returned to Florida.

A lot of A's fans have issues with managing partner and part-owner, full-time mouthpiece Lew Wolff. However, after yesterday, Wolff looks like a saint compared to Loria. Remember, Loria is the same rich scoundrel who helped kill the Montreal Expos (great piece on this by Jeff Passan of Yahoo! Sports).

Back to that business thing.

Loria, unlike previous revenue-sharing, low-attendance and low-payroll seasons, probably either lost or did not make very much money last season. It was well-chronicled that the new ballpark's so-called honeymoon period with fans didn't last very long and the Marlins themselves were terrible. So, Loria looked at the books and decide to cut costs, not unlike HP slashing 10,000 jobs. Remember, former A's owner Charlie Finley set the precedent for this when he tried to sell (for cash, not prospects) Vida Blue to the Yankees and Joe Rudi and Rollie Fingers to the Red Sox. The deal was vetoed by then commish Bowie Kuhn. Finley didn't do it to win more. He did it because he needed the money. He did it to run a more profitable business.

I tweeted after the Chris Young trade, when it seemed that Coco Crisp was not long for green and gold, that Moneyball isn't about sentimentality, it is about winning. The problem with this from a marketing perspective is that winning is just one component (although a huge one at that). Sports engender passion. There are any number of popular superstars that Moneyball would dictate are on the way down but who still are legends to their teams: Ryan Howard, Michael Young and Albert Pujols to name a few. Stars sell tickets and big money contracts have been equated in many minds to winning. Based on WAR however, these stars are often not worth half their paychecks.

The A's perpetually wrestle with the fact that they have no superstars (Yoenis Cespedes looks like he might become one though). This makes it hard to fall in love. How many Gio Gonzelez or Trevor Cahill or Huston Street jerseys are still worn despite those players being long gone? Billy Beane rolled the dice and decided last season that the marketability (defined by merchandise sold and attendance) generated by the teams previous three All Stars (including Andrew Bailey) was outweighed by their value in MLB-ready players or prospects. They were stocks that he felt were at maximum value and so he sold.

What the Marlins did is not that dissimilar to the A's except that the un-quanitative sentiment is that if the public pays big money for you to get a new park, that you should have a reasonable payroll and some actual big-paycheck stars.

Consider though, that a reasoned look at this may be that the players traded were declining assets. Like Gio or Bailey, they sold shirseys, but didn't win enough games. (I maintain the Gio trade was a mistake.) As un-sexy and as un-marketable to the average fan as it sounds, the Marlins simply sold a bunch of stocks and bought new ones. They re-balanced their portfolio -- more emerging players, less mature blue chip stocks and a greater cash balance.

We, as fans, just can't have it both ways. With statistic-driven front office decisions the term "fan favorite" means very little. Even the Red Sox, who the movie Moneyball claims used the theories set forth by Bill James and adopted by Sandy Alderson and later Billy Beane, succumbed to bad contracts that didn't balance cost with production.

Just like the A's possibly leaving their California ancestral city, this is all business. The A's project making more money in San Jose. Therefore the decision is logical. Your feelings, to them, do not amount to enough tickets sold, beer poured, etc... for them to stay in Oakland. The Marlins ownership, now at rock-bottom in terms of profitability, calculated that the players they had weren't worth the cost and got cheaper. If you remove passion, then its just business.

Blame Revenue Sharing

The real culprit in this is, ironically, revenue sharing. Revenue sharing props up franchises that should be forced to invest in a balanced way in their product so as to make money. Sprinkle in some marketable veterans with some young players and sell enough tickets and hot dogs to make a profit. The Marlins know that they can simply bring the payroll to as low as the player's union will tolerate and then rake in cash generated by other teams and you and me -- through MLB.com and MLB.TV purchases among other components -- thanks to revenue sharing.

Remove revenue sharing and baseball might actually contract organically. The markets that simply cannot support the game (and Northern California certainly has enough people and money to support two franchises) would either relocate or fold.

Baseball's revenue sharing allows the teams that spend the least to enjoy some of the highest profit margins. (Check out the data on Forbes' annual "Business of Baseball" feature.) It is a perverse incentive and one that future league CBA's will hopefully address based on the progress of the last one. How insane is it that even without five of last year's marquee players (including now Dodger-Hanley Ramirez and now Diamondback-Health Bell) the Marlins's will probably end up more profitable in 2013 despite selling fewer tickets?

If we play the baseball-as-a-business game, then you certainly would not guarantee a profit to a company paid by its industry peers. Should AMD get millions from Intel? Should Apple give to HP? As loathsome as they are, should the Yankees really be giving money to the skinflint Marlins? To the A's? I have no answer to that. It just seems worth thinking about.